Bookmakers could launch judicial review over FOBT stake cuts

The UK’s major bookmakers are considering launching judicial action after it appears the government is set slash the maximum stakes of fixed-odds betting terminals (FOBTs).

Gaming machines in a casino

Bookmakers could take legal action of the way the DCMS has handled the consultation. © Pexels.

News broke over the weekend that, despite the government’s consultation period into how much to cut FOBT stakes not ending until today, the Department for Digital, Culture, Media and Sport (DCMS), who led the investigation, planned to cut the stakes by the maximum amount, from £100 to £2, in what was described as a nightmare scenario for bookmakers.

The news saw the market value of UK bookmakers crash, with Ladrokes Coral, the operator with the largest number of FOBTs in the UK, seeing its share price fall by around 13%. Combined, the share price of major UK bookmakers fell by almost £800m.

Bookmakers also reacted with horror at the news. Despite having previously stated they wouldn’t launch judicial action against the decision, whatever it was, due to the difficulty in proving the government’s procedure was flawed, industry figures believe they may now have justification to do so.

This is because the government appears to have made its decision before the consultation had ended, with the news breaking over the weekend. As such, industry leaders believe that a judicial review may now be much more viable. Speaking to the Guardian, one anonymous senior figure at a leading UK bookmaker said:

If it looks like they’ve ignored a lot of evidence and made up their mind there’s a risk [of a judicial review] from someone in the industry. If it’s a disaster-case scenario, there must be someone who’ll say we’ve got nothing to lose.Anonymous, Statement

Ladbrokes Coral Group set to be hit the hardest

Industry leaders had remained confident throughout the review and consultation that this nightmare scenario would be avoided and that stakes would be cut to somewhere between £10 and £50.

With stakes currently capped at £100, the amount lost in revenue with a new maximum stake of £2 would be huge. Operators have also argued that such a cut would lead to huge job losses, as well as lost revenue for the government from tax.

Anti-FOBT campaigners have argued that bookmakers deserve such financial punishment, as they have been extremely lax on controls of FOBTs and have offered little assistance to the thousands of people who have experienced financial ruin at the hands of the machines. Had operators done more to prevent problem gambling, then perhaps such a drastic cut in stakes would not be necessary.

With the most revenue created by the machines, Ladbrokes Coral is most exposed to the cuts to FOBT stakes. A forecast made by Barclays last year found that the group would lose almost £437m each year should the stakes be cut to £2.

Ladbrokes Coral Group reacted immediately to the news and released a statement to the stock market, saying:

We are very clear that stake cuts will fail to adequately address any issue of problem gambling. The industry has also always made it clear that a cut to stakes will have serious consequences – resulting in shop closures which will ultimately affect jobs, tax revenue and the funding of racing… We will continue to make the case for a sensible measured, evidence led and proportionate response to the public concern regarding these issues and this will be the basis of the evidence submitted as part of the ongoing review.Jim Mullen, Ladbrokes Coral chief executive

The Group is also currently underway with a takeover by GVC Holdings, with the total amount of the takeover dependent on the result of this consultation.

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